The Government's Plan To Remove MSME Congestion Loans Is Strategic

Illustration of MSME products (ANTARA)

JAKARTA - PT Bank Rakyat Indonesia (Persero) Tbk welcomes and supports the government's plan to remove bad credit from the MSME segment at the bank, as one of which encourages the rate of credit growth to MSMEs.

Even since 2021, the Company has proposed to regulators to review the provisions regarding the delete of credit books and receivables (write-off) for MSMEs.

BRI President Director Sunarso said the MSME segment, especially micro and ultra micro, still has a great opportunity in financing. However, in the MSME segment itself, there is still a problem of borrowing and not paying off.

On the other hand, BRI, which is a state-owned MSME empowering bank, does not dare to write off the bad credit because it can enter as a state asset.

"So we need policies like the government's plan, so that it will increase the cruising range and consumption of MSME loans in the future. We have been fighting for this (delete books and delete collections) for a long time, so we welcome the plan," said Sunarso, quoted by ANTARA, July 19.

This is considering that MSMEs are the backbone of the country's economy. Currently, the contribution of MSMEs to gross domestic product (GDP) is around 60 percent and absorbs 96 percent of the national workforce.

Thus, he said, support for providing funding to MSMEs would encourage the wheels of the Indonesian economy.

Until the first quarter of 2023, BRI recorded credit growth in the MSME sector of 9.6 percent compared to the same period the previous year (year-on-year/yoy) reached Rp989.6 trillion. This amount takes a portion of 83.86 percent of BRI's total credit.

The main motorbike for BRI credit growth is the micro segment which reaches 11.18 percent (yoy). The company targets the portion of MSME loans to continue to grow to reach around 85 percent of the company's total credit portfolio by 2024.

Sunarso assessed that if the new policy was implemented, the MSME segment could be more daring to access funding, thus encouraging credit growth projected by the government to be able to encourage the wheels of the economy at the level of grassroots economic actors.

The government's plan to abolish MSME bad credit has been stated in Law Number 4 of 2023 concerning Financial Sector Development and Strengthening (UU P2SK).